From NAFTA to USMCA: Key changes on trilateral trade pact

U.S. President Donald Trump is boasting about his latest revamped trade agreement with America's two neighbors - a pact he's calling USMCA - for the United States, Mexico and Canada. The deal has a "good ring to it," he says. (Oct. 1)
AP

President Donald Trump announces a revamped North American free trade deal, in the Rose Garden of the White House in Washington, Monday, Oct. 1, 2018. The new deal, reached just before a midnight deadline imposed by the U.S., will be called the United States-Mexico-Canada Agreement, or USMCA. It replaces the 24-year-old North American Free Trade Agreement, which President Donald Trump had called a job-killing disaster.(Photo: Pablo Martinez Monsivais, AP)

The agreement, governing $1.2 trillion worth of trade affecting nearly a half billion North American consumers, is expected to be signed by American, Canadian and Mexican leaders in November. It still must be ratified by the legislatures of all three nations. Congress isn’t expected to vote on it until 2019.

North American Free Trade Agreement

Took effect in 1994; designed to last indefinitely.

United States-Mexico-Canada Agreement

Will take effect in 2020; will be reviewed every six years and could expire in 2036, or be extended to 2052.

Higher pay for auto workers

Starting in 2020, 30 percent of vehicle production must be done by workers earning an average production wage of at least $16 per hour.

That’s about three times the pay of the average Mexican autoworker. In 2023, the production percentage rises to 40 percent.

This could result in job production moving from Mexico to the U.S.

More auto parts from member nations

Automakers can qualify for zero tariffs if 75 percent of their vehicles’ components are manufactured in the U.S., Canada or Mexico, up from 62.5 percent under NAFTA.

Seventy percent of the steel and aluminum used in vehicles will have to come from the U.S., Canada or Mexico.

Canada loosens dairy restrictions

Canada will ease restrictions on its dairy market and allow American farmers to export about $560 million worth of dairy products. That’s about 3.5 percent of Canada’s total $16 billion dairy industry.

Dispute process unchanged

Trade disputes will continue to be decided by a panel of representatives from all three nations.

Tariffs stay in place

U.S. tariffs of 25 percent on steel and 10 percent on aluminum from Canada and Mexico remain in effect as negotiations continue.

If the U.S. imposes new auto tariffs, Mexico and Canada would be able to export up to 2.6 million passenger vehicles to the U.S. annually without any tariffs. Exports above that amount could be subject to tariffs.

Pickup trucks built in both countries would be completely exempt from the tariffs.

Intellectual property rules stiffened

For first time, law enforcement officials can stop suspected counterfeit or pirated goods in any of the three countries. Harsher punishments will be added for pirated movies online and civil/criminal penalties for satellite/cable signal theft.

The pact includes a slew of new rules for “strong and effective protection and enforcement of intellectual property rights.”